Jmark and Bogie.....
Hot and humid in Houston Texas? Ha-Ha, no worse than living in a swamp 347 days out of the year. I had the engine in the garage part of the shop after I got it out of the van. I have a 30 inch wall fan there and noticed sawdust on my motorcycles that are parked in there. The fan is swirling the dust around and it is humid!
So my first activity on the engine was to roll the engine on the stand to the air conditioned shop in the next room. Ah-hhhh. Better now, and no dust!

Bogie.....
Thank you for the comments.
This knocking may happen for a few seconds when I crank the engine cold, then it goes away until the engine gets to around 2500 rpm.
The knocking is not a heavy thud-thud-thud, but rather a higher pitched clacking sound. I had a harmonic balancer come loose on an old 318 Dodge I had and this sound a bit like the same kind of noise. In fact I crawled under the van to check the torque on the balancer when I first heard the knocking. It was/is tight though.

Now what you say about a possible piston crack or wrist pin problem has my interest because of the #1 cylinder looking so black compared to the other 7 which look all alike and are tan colored. I would post a pic if I knew how to do that.

So, when I get the rods out I will look at #1 first and closely.
I will let you guys know what I find. I am hoping to find something, and as bad as it sounds, it would be a blessing to find a cracked piston.
Thanks guys.........pg